How Much Cash Does a Seasonal Montana Business Need for Winter?

Every fall, a lot of Bozeman service business owners look at the bank balance and do the same math in their head. Will this last until the phone starts ringing again in spring?

Most of the time, that math is a guess. Here's how to turn it into a real number.

How much cash does a seasonal Montana business need to get through winter?

You need enough cash to cover your costs that don't stop for every slow month, plus what it takes to restart in spring, minus any winter income you can count on. There's no single right number for everyone. Your number comes from your own books, and it's usually different from what you'd guess.

You'll find rules of thumb online, like saving a few months of expenses. They're a fine starting point. But a number built from last winter's real costs is better, because it fits your business and not someone else's.

Why winter hits Montana businesses harder

In a lot of the country, the slow season is a dip. Here, for many trades, it's a wall.

The build season is short. Concrete, exterior painting, roofing, and landscaping installs mostly stop when the ground freezes. Some trades flip the other way. HVAC gets busy with furnace calls, and plenty of crews switch to plowing. But even the businesses that stay busy usually bring in less, or bring it in differently.

Then spring shows up with its own bill. You're buying materials, fixing equipment, and bringing crew back before the first big jobs pay. That restart cost is the part most owners forget to plan for.

How to figure your own winter number

Grab last year's bank statements, or better, last year's books. Then work through these steps.

1. Find your slow months. Look at deposits month by month and mark the ones that dropped off.
2. List the costs that keep coming in those months, even when the work doesn't.
3. Add your spring restart costs: materials, repairs, insurance renewals, and the first few payrolls before customers pay.
4. Subtract winter income you can actually count on, like plowing contracts or service plans. Don't count hoped-for work.
5. Compare the total to what you'll have in the bank by late fall.

If the cash on hand is bigger, good. If it's smaller, you know now, while you still have options.

Which costs stop in winter and which don't

Here's how common costs tend to behave when the work slows. Your list will look a little different, but this gets you started.

That last row matters. A lot of owners plan winter around the business and forget that they still need to get paid.

Your books have to be right for this to work

This whole exercise depends on knowing what you really spent last winter. If your books are behind, or everything sits in one big expense bucket, the number you come up with won't mean much.

If you're behind, start with catching up your books before tax season. Winter is a good time for it anyway.

It also helps to see income and costs in the months they belong to, not just when cash moved. We explain the difference in cash or accrual books for a seasonal Montana business.

Ways to make the number smaller

Once you know your winter number, you can work on shrinking it.

• Collect open invoices before the holidays. Old receivables are the easiest winter cash there is.
• Look at subscriptions and services you only use in summer, and pause them.
• Plan big equipment purchases for when cash is strong, not right before the slow months.
• Talk to your bank in the fall if you think you'll need a line of credit. It's much easier to ask before you need it.
• Keep customer deposits for spring jobs separate, so you don't spend money that's already promised.

That last one trips up a lot of seasonal crews. It's one of the warning signs we cover in when your landscaping books can't keep up with the seasons, and it applies to most trades.

Don't forget the tax money

Winter is also when tax bills tend to come into focus. If part of your bank balance is money you'll owe in taxes, it isn't winter money. How much to hold back depends on your situation, so that's a conversation to have with whoever prepares your return.

Getting your winter number with Blackfin

We help service businesses around Bozeman get their books current and use them to plan, not just to file. Since bookkeeping and tax prep are under one roof with us, your winter plan and your tax picture come from the same numbers.

If you want help figuring out your winter number, take a look at our monthly bookkeeping for Bozeman service businesses, or call 406-404-8955. You'll hear back within one business day.